Note: These answers are related to the date they were posted.
Question: Does AOPA Finance offer any options for a flight school aircraft purchase? I’d be looking for a one-year loan of $100,000 to purchase a 1977 Piper Archer.
Answer: We have limited options for aircraft being used by a flight school. Our lenders are typically limited to aircraft purchased for personal use, but made available to a flight school through a leaseback agreement. Terms for a leaseback are typically between 10 and 12 years, with a minimum down payment of 25% to 30%, depending on the aircraft and lending option available. Financing for a leaseback to a flight school often has very specific requirements, so please give us a call and we’ll be happy to discuss the details with you.
Question: I’m in the process of forming a co-ownership divided into 4 shares. I have everything planned out but the financing part. I’m not sure if financing can be done under the LLC and bill each partner a monthly loan payment 4 ways. I’m wanting to find a simple way that will be attractive and easier for the other co-owners. How many ways are there to set up financing for a co-ownership? What is the best way? Can the whole aircraft be financed under the LLC and loan payments split 4 ways to each co-owner?
Answer: As a broker, we have many different lenders to consider for aircraft financing. With partnerships, many lenders have a limit on the number of partners they will allow to be involved. Four partners is often the maximum lenders will allow. Lenders will require that each of the partners qualify for and provide their personal guarantees on the loan. The loan will not be divided between the partners, so each partner would need to qualify as if they were the only one buying the airplane. This method provides assurance to the lender that any one of the partners could continue to service the debt if one or more of the other partners is unable to. Lenders will not divide the loan payment between the partners, so the decision of who pays how much is up to the partnership. It is common for partners to create an ownership entity, such as an LLC, for the purposes of the loan and aircraft ownership. It is also common for partnerships to create a new bank account for the partnership to handle any financial transaction associated with the airplane or the loan. Because each partner will personally guarantee the loan, any change in partners would require the loan to be refinanced. Please give us a call at 800.627.5263, we would be happy to discuss your situation in more detail.
Question: When I finance a plane, may I finance a hangar with it? Or would they be separate loans?
Answer: We work as a broker and have multiple lenders to consider, all of which are specialized and experienced in aircraft financing. These lenders all use the aircraft as collateral for the loan, and they are unable to include financing for the purchase of a hangar. In rare circumstances, we have been able to get a lender to lend against an airplane for the purchase of a hangar, but if you purchase both at the same time, there wouldn’t be sufficient equity in the airplane to provide a loan for both. I often recommend checking with a local lender that has commercial real estate experience if you need hangar financing.
Question: I own a 1960 Cessna 182 C with numerous avionics and interior upgrades. I currently own the aircraft outright. Is it possible to do an initial financing now to cover the cost of an engine overhaul? Based on V Ref - I would estimate the value of my airplane to be about $85-90 K and I’d want to borrow about $40-50 K. to finance the engine overhaul and accessories. Of course, that would increase the value of the aircraft to well over 100k. I’d appreciate your advice on this.
Answer: Yes, we would have options for financing upgrades. We will prepare a valuation on the aircraft as is and a second valuation with the proposed upgrade(s). You can borrow up to 85% of the new higher value. Funds will be held in escrow until completion of the installation and then disbursed directly to the shop or A&P. The aircraft will be used as collateral and a lien will be filed at the FAA. Please feel free to give my team a call at 800.627.5263 so we can discuss your specific situation further.
Question: I am new to owning a jet individual and enjoy the convenience it offers. I own a 1977 Learjet 25B outright and bought it in September of last year. I want to pull money out of it, maybe $150k to further expand my organization. Is that possible? It is current on all certificates, and worldwide insurance, and is a Part 91 aircraft for my personal and business use. There are 2500 hours left on each engine before overhaul and we fly about 25 hrs month.
Answer: We do work as a broker and have multiple lenders to consider, however, equity financing on aircraft is not very common. Equity financing for this type and age of aircraft is unlikely to be found through a standard aircraft lender. A lender that provides alternative financing products is more likely to be able to find a suitable option.
Have questions for Adam? He is happy to answer them. Submit your questions here. Great rates. Great terms. Helpful and responsive reps. Three good reasons to turn to AOPA Aviation Finance when you are buying an airplane. If you need a dependable source of financing with people who are on your side, just call 800.62.PLANE (75263) or click here to request a quote.